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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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480

TOPIC FREQUENCY

Us 25, Citi 21, U.s. 19, Europe 16, Spain 15, America 15, Steve 13, Google 12, Morgan Stanley 9, Simon 7, China 7, S&p 6, Gm 6, Carl 5, Aig 5, Geico 5, Apple 5, Garth 5, Einhorn 5, Tim Cook 5,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    October 2, 2012
    9:00 - 12:00pm EDT  

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absolutely. okay? way overdue. i'm getting social security. i get it and give it away every month, okay? why should i get it at all? >> on that point we'll leave it there. thank you for a couple wonderful hours. >> thank you, sam. >> that does it for us today. make sure to join us tomorrow. right now it is time for "squawk on the street." good morning. welcome to "squawk on the street." i'm melissa lee along with carl quintanilla and jim kramer. we have green arrows across the board. look at the picture in europe stemming from this report that spain could ask for a bailout as early as this weekend. so we'll see if that happens. that rumor certainly has been in the market. for now it is giving us a positive bid on the futures and the european markets. we'll start out with the road map beginning with follow-through to tomorrow's
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rally. this time pimico's bill cross has some not-so-nice things to say act america's addiction to debt, let's say it involves kris mall meth. and google becoming the most valuable company after apple. how much is left in the tank at these record highs? and american airlines facing serious questions after a second flight was found have loose seats. how much traffic do they stand to lose and which rivals are poised to benefit? but futures right now moving higher one day after upbeat manufacturing data helped lift the dow and the s&p 500 to gains in the first trading session of the fourth quarter. hopes for a bailout request from spain also adding to the positive sentiment this morning. there are some calendar issues in terms of the request from spain to october 21st is when there are regional elections and sometimes probably after that there will be a request from spain for some sort of a bailout. >> i always find the way the market looks at these things is
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rather extraordinary. you have the most important banks and what's happening is it's saying, look, we welcome it and the stock goes higher. bbva, another player, when you have bailouts, the stock is supposed to go lower. think about our country when bank of america decided to take the money. then they had to go to an equity law firm. this is encouraging to me. i would think this actual bailout is one that says, we are now past, the pig is much further along. you don't want a python swallowing a pig, but it's going to follow it when it is finished. >> words to live by, jim. words to live by. >> i think about that often, actually. >> we just listened to an incredible hour of television on "squawk box" with zell talking about what he's seen in the economy, talking more about corporate i.t. upgrade cycles. here's what zell said not too long ago. >> nobody wants to make
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commitment to be on tomorrow. we run a company that does a lot of corporate enterprising installations. and one of their triggers is when the enterprise projects start getting delayed, we are heading for a recession. and that's exactly what you're looking at right now. >> when the enterprise project starts getting delayed, we are heading for a recession. that collides with the calls we are seeing regarding cisco right now. jim, channel checks going on? >> cisco, morgan stanley put out positive comments, but when you think about icht t. spending, it is oracle and cisco. the one thing confusing for me is ibm, sap, they both said business is quite strong. accenture just said these are strong. imperricly he's wrong. anecdotely he's right,
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imperricly he's wrong. >> not just highs but record highs in yesterday's recession. we are seeing the providers do well in today's stock market. >> i'm surprised how often it comes up when i have decision makers talking with me they are unwilling to commit additional capital as needed. we hear it from our guests, it comes up time and again. it is somewhat overstated. can it be paralyzing business to such an extent? but it is there and i think stories like today's "new york times" which indicate perhaps -- >> you mean sorkin. >> no, progress on the front page of "the new york times" perhaps that will be embraced. imagine what would happen if we dealt with the budget deficit in a meaningful way and did deal with the issues? one thinks the uncertainty cloud goes away.
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if it doesn't, there's something else going on. >> i was referring to a sorkin column arguing that a lot of the p.e. firms have to use this money in the next few months. pretty lofty money when you talk about price times, even at dow, right? >> i'm surprised there hasn't been more activity from private equity. they need to put the money to work or god forbid to give it back. that's not something they want to do. they can borrow fairly well. maybe not to the size overall of the deals percentagewise, but incredibly generous terms and we have not seen the kind of deals we may have anticipated. i know andrew wrote about that today. >> i'm pro-law on "mad money" as the large real estate trusts are getting industrial use in warehouses. he said something really interesting, you know what? we are finally running out of space. we are going to have to start building. nobody's building anything. don wood and comes, we are
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almost out of shopping centers, we have to start building a couple. this is a continual theme until a worldwide america. we don't need anything. that's the problem, we don't need anything and we just built too much in the country. spain built too much for certain. >> spain built way too much. of course, we are still growing. they are not, we are. >> they are shrinking. >> that brings to call the housing market today. they actually boost their forecasts for starts in 2014 as we start to burn off the excess inventory. >> it seems they talk about the lost housing to be the lost housing decade and where it is in the system. a lot of the housing is caught up in short-sell property. i try to buy the short-sell property, give me a break, i don't have time. it is so hard. it is way harder than buying a new house, which is why people buy a new house. buying a piece of property takes months. i'm trying to close on this
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apartment i'm buying for rent. yesterday i lobbed in a coast. this was a july piece of business. well, this has to be checked off. ment it is so hard. that's why i felt that zell made some good points. whoever the government is that made it so hard to buy also made it easy to buy. >> the banks are doing it on their own. five, six years they were willing to lend to anyone. >> sorry. >> go ahead. >> that was pointed out by the citi note that underwriters are much tighter these days. so the risk is we have all the starts and the home builders are doing well but they will reach the point where the buyers can't get the credit they need and demand is gone. >> that's why when the toll brothers made it, they were in the process. it is one of those things, why aren't more people using the money and bernanke -- go buy a house, chairman. chairman bernanke, go buy an apartment for rental. what you'll see is unless you
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pay in cash or cut out the banks entirely and that hurts the rate of return, unless you're paying crash you'll tie yourself up for a really long time. evil gains are feeding into things. i do need to modulate here in the risk of the parts of corporations and the banks doing a 180. this is trauma from the financial corporation, which is okay. you want them to have some memory of it. >> i'm not a libertarian, okay? i believe in the law. i am not someone who says, we have to slash the regulations. i'm just saying, you know, the impotence is to not -- you go to a bank and say, well else do you want to stop me from. >> you have the money, what are the other reasons you don't don't want to give me the pun.
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>> to clamp down on the non-bank lenders giving mortgages to everybody and being packaged up by bear stearns. years later we are getting the lawsuits. >> you are not a far-right wing heck. you are a reasonable individual. >> it seems so often. a lit more too late. >> had you read the complaint from the new york ag. it's a reminder in the private e-mails what these securities were like. >> there's no doubt it was atrocio atrocious. it was years ago and you wonder what a lawsuit like this does in terms of confidence and the willingness of the banks to again take risk in any way. they will fight it. we'll see what happens in court. >> the conversation with the bank goes like this, okay? we don't want to lend, we don't want to lend, but that's the sub text. the appraisal didn't make it or
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you need more paperwork. let me see how the assets are doing away from you. you don't want to come out, there are other banks who have the mortgages on. it is certainly an interesting time for that particular interview in light of this. >> there's a time when the banks are making more money because of the fed's plan. that's great. again, if you own stucks it is terrific. if you want to buy a house, it's hard. we are moving to google watching shares of that company a day after the share finished at an all-time high. it jumped to $249 billion. people were nervous melissa meyer was leaving the company. they have moved on now. >> if you got the iphone, your
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on google constantly. where did forte go to college. i'm constantly looking -- how many interceptions can romo throw in a game? >> i should have looked that up. it's a question. dirt bengall owned minute made. a guy named bing crosby probably eludes a lot of people. microsoft is desktop. i often carry this around and people laugh at me, but i have carpal tunnel and that's okay. you are going to be googling on your handheld. did you see the numbers about young people? so% of them have smart phones. you cannot -- someone the other
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day, i sent her a picture because phone can't accept that phone. i was sending pictures of any dad with the two ear leaders at the game. anyone who couldn't get that is off my list. >> so you're deal nighting your fans as a result of their technological paralysis. >> would you have a better. you have to prove! >> you are basically a menonite. >> yes, i am a mennonite. >> is it dangerous to listen to sam cook and dance? >> just like kelly mcgillis. >> oh, yes. the optics for google is surpassing them in 2010. since last october it hasn't
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gone away. >> what about ten years? we put it up yesterday. that's optics right there. >> the ten-year looks like dead money and then it shows money from the dead money. but it has not gone anywhere. it can't go past -- you still cash coming in enormously fr. >> the closed model you had was okay, but i'm similaring here dealing with microsoft. i have to deal with them. apple, they will solve that problem. once in the organization and another plays defense. it is not the bears' defense. it is more the jets.
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you know what they are? they are on the punt pass. the season is over. >> two games left. >> there's a pup blast, a physically unable to perform list and microsoft is on the pup list. hewlett-packard is on there, dallas i.r. is there. >> are they career-ended injuries? >> come on, microsoft has a 3% dividend yield. >> sanchez just has to complete 3% of his passes. >> just keep going. >> i want to go with the man -- people didn't go for this. i'm going football metaphors. >> i thought it stayed on so i wasn't following. let's talk american airlines. american airlines has
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temporarily grounded eight plans evaluated after seems became loose on two lanes in the last few dids. the investigators are the latest setback for america. they have been hurt in flight delays and cappslations causing travel agents to book flights with other airlines. of course, there a bitter dispute going on and a lot of the delays are pilot differentiated. americans lost could really be a gain for the other carriers that we talk to like jothers. >> even as crude flirted with 89, "usa today," no relief at the gas pump. >> ever since kramer took over
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"usa today" it's been more accessible. >> the armed forces. >> i'm not sure, it could be for kraft ringing the opening bell. i kind of doubt it. generally when we get applause like this on the floor, it is somebody in public service or a member of the military. >> you do not clap with cream cheese. even the philly cream cheese we don't laugh with. go navy. go navy. [ applause ] >> it's a nice moment as we are in a political zone week. presidential debate tomorrow, but there's one thing we all agree on, we say america first in a different era. >> when i was growing up in the
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'70s, they would be booing these guys and kicked rotc off campus. everyone talks about going the wrong way with business, but we are going the right way with them. >> that means the opening bell is close. we'll get that in a few moments. meantime, if steve jobs were alive, would he fire tim cook? we'll explore that idea in our boss segment. and we'll go from ford to gm to chrysler with one of the best septembers in years. and we'll take one more look at futures on this tuesday morning after that rally that did happen on the monday that got chopped in the street. '"squawk on the street" will be back in a minute. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.
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welcome back. if it received this designation, aig will be regulated by the fed. this is not a surprise, aig is often mentioned as one of the firms and aig said it expects to be eventually regulated by the federal reserve as a non-bank systemically important financial institution. it has not been deemed that but it says the fed is considering aig to become one. we'll wait and see on that. melissa, back to you. thank you very much, mary thompson. jim, i'm curious to follow aig,
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does this make a difference from an investors standpoint? >> no. what happens with aig is it discounted from the tangible book value and he's trying to monotize that. i think anyone who sells aig off this has clearly been on alpha santori on this bit. just like when apple maps sends you here when seeking alpha. last night on "mad money" jim did the fourth quarter checkdown of stocks to pass if the price is right. which stocks are open to him? his mad dash is next. plus, creating technology products near the united states means an executive is making such a move. we'll take a look once more at u.s. futures as we head to tuesday on wall street. the higher open across the board looks like much more "squawk on the street" straight ahead. all energy development comes with some risk,
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jim's mad dash, you heard the applause a few moments ago, the u.s. navy is visiting the nyc to celebrate the newest warship, the "uss michael murphy" honor destroyer honors p. michael murphy, a s.e.a.l. the commander officer tom schultz is here and ms. maureen murphy and the mother of lieutenant murphy. he was awarded the medal of honor for a reconnaissance mission in afghanistan. >> to get the honor, the medal
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of honor, is the toughest thing we do. it's the hardest thing to earn in this country as it should be. and we have to recognize these people for saving us on a daily basis. >> let's get to business really quickly. mad dash, what are you watching first? >> kraft. the research on this is all positive. almost to a t. and i have to tell you i do think it is an inexsensitive stock. a nice place to be for those tired of hershey and general mills. kraft is good. >> do you have thoughts on mondolese? >> sometimes you want to go to the one equivalent of a lrlchea. a tobacco company with a food division is almost equal to apple. i'm not kidding. it is a really remarkable thing. >> what else? >> well, i think that when i'm looking at what people are talking about, i see this core
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lapse not written about enough. the cob, this is the most consistent oil company in the world that does the mapping reservoir, is there oil in the ground? they missed because of north america. this is part of the slowdown hurting unemployment in this country. it is important because natural gas is finally coming back, so maybe there's a chance that this is the last -- that this misses one time only. >> fascinating niece the journal today about world war ii bombs that hold drillers at risk in the gulf of mexico. so many things to watch out for in this world. >> i remember a long time ago about the switches in puerto rico and the navy was shelling it. no offense to the navy, that is where you train. now it's like a great w. people love the w. star was downgraded today by someone. that's a misplaced downgrade. >> we'll get to more names after the bell. when we come back, the ceo of citi mortgage gets put on the hot seat.
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if only every opening bell could look like that. at the big board, the u.s. navy. they are celebrating the newest warship, the "uss michael murphy" honoring the late lieutenant michael murphy, a s.e.a.l. awarded the medal of honor. at the nasdaq, kraft foods group ringing the bell from northfield, illinois. where do you want to start, guys? we saw a downgrade of citi yesterday, today we get an upgrade. >> this is a rather remarkable background because citi moved to
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65% of emerging market. we thought that was great. suddenly emerging markets were good, now we don't like it. this is more of a call that maybe citi holdings are winding down. that was a question talked about on scott wagner's show yesterday. how far along are we on the wind down? i don't know why, but i always come back to thinking that citi one day is going to be a great stock. it is just not there yet. >> and we had credit suisse weighing in as well. it was a sector call. two key drivers, lone growth and asset quality. jpmorgan and wells fargo got neutral ratings. >> new management came in there and turned it around. the little ohio banks, no one thinks of them, but there's real performance to be made. it was a $2 stock and is now at $6.97 today. those stocks remain incredibly cheap versus historic paradigms.
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>> we have chrysler sales for september early on. ford is now on. phil lebeau in chicago with those numbers. good morning, phil. >> ford is reporting that september u.s. sales were down 0.1%. the estimate is for a very marginal increase. so again, ford roughly in line with estimates. guys, the tone of the calls is what everybody is going to be looking at today in terms of september auto sales. what do the automakers say about possible production increases in the first quarter of next year? that's what people will be looking at. we know september sales come in about the 14.3 million range, but again the calls, that's what everybody is focused on. back to you. >> all right, thank you very much, phil lebeau. as far as chrysler's numbers go, the dodge avenger mid-sized sedan up 89%. >> wow. >> leading strength, as we said, chrysler had one of the best septembers in five years. >> ford, very tough. everyone always calls and said,
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jim, ford? ford has terrible business in europe. >> for the first time in world war ii they sold more bicycles in the middle east than cars. >> victoria's secret, you like that one, right? >> it makes everybody's top ten list. >> holiday projections on sales, they see it going up 4-1. it would be less than last year but above the ten-year average. >> less than -- are they sticking their finger in the air? come on, we don't know. i do think things are better. if you talk to bf corps, talk to macy's, talk to jcpenney, things are better. >> jcpenney giving up the gains made yesterday in anticipation that congress will talk positively in jcpenney. the stock did go higher yesterday but some pulling back in today's session. i also want to point out, david,
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your excellent interview -- >> with barry rosenstein yesterday. we have no intention of splitting the company up. that's the focus right now, but the stock is going to be weak because of that mosaic. >> the mosaic i have on tonight on "mad money." very disappointing. this is one of those where monsanto reports tomorrow. that's the star of the ag show right now. >> the story of the mosaics highlights the fine line at how much does the drought actually help the fertilizer in the farm equipment makers or how much does it hurt? because what they were seeing the caution because of the broader economy and the pull-back in anticipation of next painting season. and there's also mosaics most notable problems, lower beginning inventories to the season and lower mississippi river levels. their ability to meet on the production side was impaired and the ability to get the product to customers was also impaired. sort of a double whammy. >> i always find in if you look
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through and come one the reasons, that's a mistake. people wanted -- they are used to having the fertilizers, but this is the interview. daviders it was almost as if the guy felt entitled that the stock goes higher. this is wrong. it should be higher. that doesn't work. >> it's a strange one to make an activist case. you saw it down a bit today, but a 52-week high or near a 52-week high. for its part, it has done well. we think it can do a whole lot better and make more money. it is getting nasty in terms of them and morgan stanley, which has advised the board thinking there's disenergy since splitting up the company. the part of this business, they claim its tractor supply, but then agrim says absolutely not. >> i have a hat from there, but the charge that morgan stanley, he made about morgan stanley,
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was a whopper. you felt you had to go ask him again it was so -- it was just about ethics. >> yeah. we'll see. it was interesting language that was used. >> saying that morgan stanley was not -- >> the comps and how they changed the comps, this is an area of some contention. >> retail investors love fertilizer stocks. this is true. >> a lot of volatility in those things. >> they like -- they don't like coned downgraded today. i like high-flying fertilizer. why don't they go to a fertilizer plant to get a real nose full and see if they still feel the same way? >> phosphate. >> if every stock literally had to pass a test, we would all buy hershey and that's it. >> hershey is a much better performer than potash.
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let's go to bob down on the floor. >> for a second day s&p futures went up in the middle of the night and went up because europe opened. this happened yesterday. we moved right up as soon as europe opened. happened again today. that's the reason that we are open right now. we are up right now. the big question on the spanish bank bailout, of course, is as you have been mentioning, it is when, not if. the two dates important are this one, number one, october 8th, that's monday. that's the date that the eu's permanent rescue fund, the esm, becomes fully operational. that's october 8. that's also the date where the first board meeting of this rescue fund, the esm, is going to happen. that's why, and i think melissa mentioned this, some speculation and request came over the weekend. that makes sense procedurally. spain already has the budget and the evaluation of the bank recapitalization. if it doesn't happen then, the next date everyone is talking
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about is october 18th and 19th. that's when the eu leaders get together and that's the next likely date. those are the ones two people are talking about. what i really want to hear more is the details on the span irk bad bank. we are supposed to get more on what's in this bad bank. this is where all the real estate toxic assets will be created. this is going to be the largest real estate company in spain in the next few months. we really don't know much about it. we'll try to get to more on that shortly. we'll talk about earnings quickly. we are two weeks away from the real start of earning season, but the big story is everyone is talking about q4 earnings and what happens with the banks. there's an enormous contribution coming from banks to the s&p 500 in q4. we are expecting 22% increase in bank earnings from q4 last year, huh? that's a huge contribution to the s&p 500. and a lot of people are trying to figure out now whether they will be able to make it. here's good news for the banks. mortgages have been good. originations are improving. remember, the fed's in the
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market. the fed is a big buyer of mortgage-backed securities so prices will go up. these guys will be able to sell into the securitization pools at a nice tidy profit. whether it is good news for the fed, they will make money is another question. morgan stanley today moves suntrust up and first boston's overweight specifically because of their exposure to the housing market. here's the bad news. we all know commercial growth is anemic. we have been talking about the net interest margins getting come pressed because, well, rates are so low. that's an issue. i'll tell you what i'm worried about and the reason i'm concerned with the fourth quarter. have you seen the price of the banks? everyone knows about the housing run-up. everyone knows that credit is improving so bank of america is up 60%. we've got wells fargo up 25% this year. bb&p is up 25%. all the banks are up 20%. that's why deutsche bank today downgraded wells fargo and bbt because of the price run-ups. that's where the market could
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run into trouble. back to you. >> the banks, what a battleground because i believe they are inexpensive long-term, but short-term they have moved up a lot. we'll check the bonds and the dollar. rick santelli is live. how you been? >> well, the news is odd. you look at the markets and everybody's celebrating because spain is rumored to be ready to ask for a bailout. so, of course, the markets really like that. if we look at one-month chart of tens, this is supposedly the safe harbor. the historic amount of mutual funds is in bond funds now. boy, we are not going anywhere quickly with the treasuries on note rates to the low 160s unchained. leave it to boon with rates dropping in spain today. only a couple basis points higher. look at the euro, it popped right back above 129. open it up to a one-month chart. what you see is this currency really is starting to look technically like it wants to do better to the upside.
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if we look at spain specifically, i see that all the rates are down anywhere from 14, 15 basis points to as much as 25. i like to look at the tens versus the twos. it's a parallel shift down over a dozen basis points. look at the ten-year versus the two-year chart going back to june. this is important. july 26 really steepened that, it's the flattening they don't want to see with implications for funding, but here it is perched near 250 basis points. there's about 100 base points of air underneath it from that big steepening. this is what you want to pay closest attention to. jim, back to you. >> best analysis i have heard. and the euro, geez, talk about what no one thought. there are a lot of quarters that will be reported soon where we see people adjust up because of currency after so long. >> did you see the survey in the journal of cfos who say 20% of companies juice their earnings
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with reserves and one-time items. >> that was fun for a while. let's check out the latest news in energy. let's go to sharon with the latest. >> oil prices are unchanged on either side of positive and negative territory here for wti prices as traders digest the data on manufacturing. from china yesterday not so great. u.s. manufacturing data a little bit better. then we have to wait and see what the supply data will hold from the energy department when they report tomorrow and in the american patrols tonight. in terms of natural gas, we saw natural gas rise above the 3.50 level, but fdr capital mark says look for nat gas to get to $4.50 in to 13. they expect that to be the price to incentivize drilling and because of the supply and demand fundamentals. in terms of what we are seeing for the gold price, we are looking at a little bit of a
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pull-back and profit taking and consolidation after hitting a new high there for the year of 1794 in the previous session. central banks will be the key focus. back to you. sharon epperson there. we are talking off camera about bill actman's appearance on "squawk box" this morning. we expected him to talk more about jcpenney andhe talked more on proctor and gamble. let's listen. >> this is a very fat and very bloated company. in a competitive world when your competitors are more nimble to make better decisions and better cost structures, they can reinvest in growth. >> said the board's highly qualified. jim? >> the board is not earning, not to diss the others, but i think actman's information is old. proctor was the number two
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performing stock down for the quarter. mr. mcdonald is well on his way to take out $10 billion in costs. the previous ceo had piled asset on piled asset. he was on my wall of shame money after believing this company is not the company that ackman said it was. did ackman play a role? he was very apologetic in his office, but the stock is speaking volumes and the stock is moving up because things are better at proctor. >> he's already benefited from the stock moving up in p&g shares. a small position in the market is still worth $190 billion. it is interesting he was able to influence things aat all. a lot of people thought the company was too big to influence, but mcdonald was hearing about it from other shareholders as well. as the board was. >> well, the ceo of boeing, which is in a big labor dispute
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right now, is a guy basically not going to tolerate -- he is not going to tolerate disappointment. when you speak to mcdonald, he'll see mcmcarnie will fire me. >> david horn is expected to speak. there are a few stocks on traders' radar today in relation to what he might say. lulu lemon, herbal life, among the obvious. >> those are all shorts? >> it was at this congress a year ago that he announced the short on gmc. >> exactly. >> it was a well respected short seller. >> and a horrendous support. her and greenburg go back and forth on what happened with barry -- >> let's just be clear. he was on a conference call and didn't have position but he got people spooked for sure.
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>> green mountain very controversial stock. i don't see a lot of up side to it. >> we'll be listening for him this afternoon. meantime, we have the ceo of citi mortgage in the hot seat. while borrows like you may not be getting all the savings passed on to you. as we go to break, take a look at the morning's early movers. [ male announcer ] the 2013 smart comes with 8 airbags,
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i want to take you live to where mark zuckerberg is being interviewed live. yesterday prime minister medvedev trying to put more facebook infrastructure in that country. let's take a quick listen. >> it is frozen. >> i'm taking state against petersburg this weekend. >> zuckerberg looks dressed up compared to his interviewer. >> he did wear a suit and tie when he met medvedev. facebook and russia, 9 million users with a domestic copy of facebook called the vk. they come in second in that country. >> eventually they are -- >> i wish we knew what she was saying. >> i think he said we will bury
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you. >> tear down this pay wall, that kind of thing. >> yes! and mr. gorbachev teared down the pay wall! when we come back, when it comes to tim cook's leadership, what would steve jobs think of this? but first -- coming up, kramer is kicking it into high gear. his six stocks in 60 seconds will energize all of us. get your jim joke when "squawk on the street" returns. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing,
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the minute europe opened the markets rally. >> dow has not
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♪ 10:00 a.m. coming up. we'll begin with simon huff. hey, simon. >> shawn matthews will be joining us. microsoft, google or apple? we'll also have renown chef nobu on the program. he's opening a hotel in vegas, believe it or not. back to you. >> that jalapeno is the best
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thing on the planet. meanwhile, six in 60. >> it is a bunch of new products. deutsche says panera remains strong. >> this is the survivor. this is the quick service food people really like. >> credit sweeps goes from a hold to a sell on safeway. >> this is whole foods. trader joe's if it became public would be a sidebar. >> b of a, recommended by sirius xm? >> this really is interesting that the stock could be capped by liberty media, but they went out to give it a $3 price tag. please don't change that. >> wynn resorts, buy it? >> when is a chinese play. you have to believe that the chinese are going to start spending again or it won't work. >> skywork solutions? >> this is one, do they have enough in the apple ipod? do they not? it goes back and forth. >> more of the names, go to our
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website. >> mosaic is the oldest battleground stock and they don't do tv. i'm very excited about it because this is a stock, other than sirius satellite and sprint, the most i'm asked about in the lightning round for "mad money." i'm looking forward to this. i think there's a long-term story, but the short-term story seems clouded by the drought. >> one thing we have not talked much about is this letter from bill gross this morning from pip coast talking broadly about the u.s. addition to debt to bury this comparing it to a marijuana user or a cocaine user but actually a meth user. you talk about a lot of not fighting the fed central bank rally. even if it is danger snous. >> there's no mr. white here. i'm a paul krugman backer. he is saying austerity is not working anywhere. i'm taking krugman over mr. gross and mr. white. >> interesting.
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see you tonight at 6:00 p.m. and 11:00 p.m. eastern time. when we come back, the rival heating up between apple and google in more than one way. and the vice president of u.s. sales will be first on cnbc. don't go away. with the spark miles card from capital one, thor's couture gets the most rewards of any small business credit card. your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics, put it on my spark card. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet? [ cheers and applause ]
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♪ welcome back to "squawk on the street." it's the tech titan that just won't stop. google's stealth rally continuing as it surpasses microsoft in the market cap becoming the second most valuable tech company behind apple hitting yet another all-time high today. so with all the highs it looks as if there's still more room to run. and from tech to the airlines, embattled american airlines facing another pr problem after a second flight was found to have loose seats. plus, on the heels of the third quarter's big key rally, will the bulls take charge in the fourth quarter as well? shawn matthews is here to lay out his take. and general motors out with the september sales numbers in mere minutes. we'll be joined by gm's vice
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president of u.s. sales in just a moment. meantime, we are keeping an eye out here on shares of google this morning and yet another all-time high in today's session although it has given back a little bit of that so far. google's market capped jump to $249 billion passing microsoft to become the second most valuable tech company in the world behind apple. will the mega rally continue? then google is rated outperformed. the price target is $725. at this point google has surpassed the price target, so are you more inclined to raise the target at this point or do you think there aren't any more paddles to keep the stock rally going? >> i think it is more of a momentum story. with momentum story you are looking for catalysts to take it down. we don't see many on the horizon so we believe the company will continue to move forward. over the long-term we continue to think there's more opportunity for google. >> i'm just curious, you have seen a lot of the momentum
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stories play out, what is behind this momentum story when it comes to google? why do investors love this particular stock? >> it just got too cheap. this was a stock growing the top line of 25%-plus consistently. yet it was trading less than ten times. well, it's not an expensive stock. you have people less concerned about the apple threat and the facebook threat. those are combining to drive shares higher. >> i want to bring in connie gillis joining us from the set. collin, good to see you. you have a $625 price target. at this point do you thick with it? do you think it will be $625? that's quite a fall from where we are. >> i was there just not long ago. stock was below $600. it has been a very impressive run for google.
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google does well in the second half of the year. the market could be overlooking the facts in the quarter. this is the first quarter we'll have motorola. the other problem is we have the decline in clicks. many are paying less for google products. that's a troubling trend. >> the cost per click issue in my mind is completely overblown. without putting that in context of more clicks, people using their services more, it does not matter what the cost per click is. it matters how much money is overall. if peep really paying less per instance, that's not the issue. the issue is they are clearly making more money. this is only a positive for goodle over the long term.
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>> let me ask you, you clearly have it in the way that there's a different type of tech company now. i wonder if this is true, with facebook, apple and -- steve jobs in his pursuit of ideas, and for the technology with google, certainly, an arguably -- you also have it with facebook. are they different or at they winning at the moment and appear to be different from microsoft? >> there's been a big rise in the tech-oriented company that is pruz one product, step over and over it again. the enterprise market is still a lucrative companies such as microsoft with the visibility of his point, it is more about
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clicks and the pricing doesn't matter. as we move to mobile, 1.3 million android phones are activated a day. the less clicks are may be solvable, but it is not being solved right now. >> ben, what is at stake over the maps. it is about the search result in the advertising that comes on a local level after that, is it smart that the ecosystems of google and apple are separating or not? >> again, at a high level you'll look at two companies becoming direct competitors in every sing of the world. operating apple on the home screen is probably a lifetime thing. you will probably see kodak move away from the ecosystem and
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everything. the two systems will go after each other and i don't think their products are going to promote an enemy. >> they keep growing expenses faster than their top line. for a company of this size, i find that a little disturb bes. ben, would you agree they could have more physical opinion and more focus. but this is not a company that lacks ambition. following this for over a decade, it is fascinating. thee guys really have drank their own cool-aid want to see them continuing to push off nor off, getting into more and more offices and do things untone. you are seeing them do this --
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>> i'm curious, the next frontier of computing will be the wearable pc, things like glasses and other devices that you wear on your person. so in your view when you're thinking about expenses and trying to be more focused, is that a distraction or investment in the future? >> well, what you have to do is look at your time horizon, right? if you don't have a long er lis, i'm impressed with this, but in the short-term when growing your expenses that much quicker than revenue, you are now going to be down in the 20s. i'm hoping to her about that on the earnings call. >> ben, you started this conversation on the momentum on the stock. one of the brightest things was
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to not get up in the technology momentum. that's how a lot of people saved money and others lost a lot of money. similarly now, actually, when push comes to shove for long-testimony investment and like microsoft or will it be google in the like? >> i don't cover microsoft or apple but people are using internet and more. they are making this available to you better on form factors. having people use your services more over the long-term is usually a good thing. i think that over time through the different challenges and opportunities that mobiles prevent, such as google and facebook. people use their services more often. >> guys, good to see you both. breaking news this morning, we have gotten ford's numbers. phil lebeau? >> we'll talk about gm in a
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little bit. but we'll about the numbers increasing 41.5% from the month of september. toyota reporting better than expected sales in the increase of 41.5%. now we'll switch to talk about general motors. sales were increasing 1.5%. just a smidge below the street increase. let's go to kirby oneal. curt, characterize the month for us? how could you characterize the month? >> we characterize the month as great, particularly from a passenger car segment, phil. we had great passenger sales. when you look at spark and
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sonic, we had a great market. cat lick is doing well. passenger prices are up as well. >> this is getting a lot of attention from you guys, full-size pickups. you're waiting for the new model of the silverado to come out. so you built up the old inventory of the old silverado. pickups down the month of september. you are at 116-day supply. is it getting tougher to move that medal, so to speak? >> we are very disciplined when it comes to full-size pickups. a lot of that year over year was due to fleet sales. we transition to 2013's 45 days sooner than a year ago. so the rebusiness was about
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flat. we are currently the largest incentive spend in the industry in full-sized pickups. we think that's the right approach. even with that discipline our inventories were down almost 9,000 units from a month ago. so we feel very good of where we are. >> we had the least -- you sold more than $1600 for the year, are most of those sales primarily coming in california? and how much is being juiced by the leasing deals you're petting out there in order to bring people in with massive discounts? >> a lot of the estimates, incentive spend or overstated are quite frankly, bill. new technology, but but we have
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to take a much longer approach with the vehicle. a halo here, the elec strks rication of a month's story. we feel good because it set a record. >> kurt, i understand where you're coming from. what is the average incentive for the bull market? what's the average cash on the moot market or anything that we would put on a given vehicle. >> it is competitive to be in the marketplace. it is a much bigger story to tell than just a monthly story. that is technology that we need to continue to grow both in the
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u.s. and globally. and we'll continue to do that. >> kurt mcneil, joining us from general motors headquarters when sales numbers went up just a smidge. melissa, back to you. thank you, phil lebeau. we have another dose of breaking news. let's go to amman jobbers in washington right now from the sec. amman, this news is coming. >> at this hour even as we are talking ability a hearing over at the fcc. market structure and other technological issues. in her prepared remarks shapiro says we have to look over the high cancellations of orders and high-frequency trading,
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generally manipulative sessions. we have talked about that here on cnbc. they will hear from a number of panels today over at the sec including reformers as well as representatives from the exchanges themselves. and some of the biggest traders in the market place, a day-long series of conversations at the sec on the future of high-frequency trading. >> some of these companies could save us from ourselves. because if we make an era, the repercussion is critical for our family, considering the curves. >> there's an allen switch that could make in a good idea for similar stocks. but you need something market wide. we'll see where it goes. let's get a market flash back at hq. >> thank you, simon.
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we are watch iing express as th slash their guidance for the upcoming quarter by half. the company now expects to earn between 16 cents and 20 cents per share. the her husband says there have an abrupt in numbers. back to you. next on the program, american airlines stepping up inspections for new seats now to eight of its aircraft as investors say who the winners could be in the environment. and up next, the fourth quarter kicking off with a bang yesterday, but will the excitement be short-lived? shawn matthews is joining us for his take. accolade overdrive.
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will the bernanke put keep its steam heading into 4q? let's be i thiring in shawn mat. always good to have you on. good morning to you. >> how are you? >> good. >> the question is whether or not you see any sign that inflows into bonds will reverse. is the average retailer investment going to take a spin on equities in the fourth quart her? >> i think the equity market is fairly valued here right now. we do have external issues that are problems, certainly the fiscal cliff out there will be an issue. getting the government to get its house in order will allow the equity market to continue to go up. when you look at it from the other asset classes, other equities are reasonably priced. >> it is one thing to be placed, it's the other for investors to
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feel that they are well priced. are you saying -- yesterday we had somebody tell us sentiment is more reflective of a market low than a high, do you think that will change in the next few months once we get pass ed past the cliff issues? >> it is a low level and has been there for a prolonged period of time. there's going to be a shock here in the marketplace. retail investors will take a while to get back into the marketplace because clearly they are looking at it from the perspective of being pessimistic about the markets and trusting wall street. but certainly from a relative value standpoint, there's value out there and certainly from a global perspective the equity market is cheap. >> what is your notion for the underperforming managers out there in the fourth quarter will be forced to take on more risk? >> i think you always see that, especially with a rally everyone
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is begrudgingly getting into. people start to chase returns going into the end of the year. that's normal. and certainly in this market place as well you'll see people pushing into the high bids trying to get returns. >> isn't it the case if you underperformed you could be taking a bearish bend on the market? it would be hard to fulfill what you're suggesting. >> we are talking about two classes. we have the asset managers, the large plain vanillas looking to put money to work in the higher names. the hedge funds look at it from a different perspective and the short side. i personally think we'll see volatility pick up going into the election and into the end of the year. so there's opportunities to trade with volatility higher. >> shawn, one of the things that hasn't come back is the volume in the market. it looks now for a fifth straight quarter we have substantial declines. one of the traders said it was another brutal day down on the floor of the nyc.
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who is likely to exit now equity trading? for many it is a marginal business. the margins were razor thin anyway before volumes. who do you think will exit on one of the implications of that? >> i think you will continue to see people pulling back from the equity markets. you have massive divisions at the large financial services firm. they were too big in nature. you'll see pairing back as you continue to see that into year-end. we have seen it over the last six to nine months as the markets are difficult from the counter perspective. we are looking to grow and add people. it's a great time to pick up market share while the others retrench because they were too big. >> finally, shawn, in addition to the fiscal cliff, we have to get through the medium-term resolution in europe. santelli was making fun of the fact that you get a little more exception spain is asking for a bailout and investors applaud that like it is a good thing. do you go along, is sentiment
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perversed right now regarding europe? >> i agree. europe is a long-term problem. when you look at this leveraging, let's take japan, for example, this is a 20-year cycle going on. the u.s. is in the deleveraging cycle for a while. europe is a few years behind us as far as de-leveraging. this is a long-term scenario they have to figure out and will have to actually look to implement austerity measures. i know that's something people talk about. implementing them is much harder than announcing them. that's part of the problem right now. >> as is we can see every time there's a riot in the streets of madrid. shawn, appreciate your time, as always. have a good one. >> you too. >> shawn matthews. meanwhile, nobu getting set to take on the world of hospitality with the opening of its first boutique hotel next year. simon is going to give us a tour of the new locale next. and still to come on the program, if you're getting the full benefit of record-low
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mortgage rates in what you have on your home, congratulations, not all are. we'll talk to the nation's largest lenders next on "squawk on the street." ♪ into a scooter that talks to the cloud? ♪ or make 70,000 trades a second... ♪ reach one customer at a time? ♪ how do you help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪
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from sushi empire to palace empire, nobu is opening a boutique, nobu hotel on its property. the man himself joined us on wall street to explain why. >> a lot of restaurants we do inside of the hotels. so we have a lot of experience. we maintain the quality. many professionals are in hotels and restaurants. now we do maintain the quality of the food. >> why take it to a hotel? why a hotel now? >> well, so i said, so we have restaurants in our hotels in las vegas and australia, all over
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the countries in the hotels we have experience, and my team is growing. especially my partner owns hotels, so he was interested in opening a hotel. >> so you have this superstar involved in jet blue, jfk, the lincoln center in addition to the w hotels, what are you looking for here? how will it appear different from the other restaurants or is it the same? >> i began doing this in 1994. we have a nice relationship. so he's growing in other hotels. with e do the restaurant and hotel, too. >> trevor, you mentioned that
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you're being brought to the robert de niro investment team. how will you mark this business out? like normal room hotels or suites? >> i think you have to look at how we did in the hotel business. we are entering in a small luxury product, so we are not doing big hotels and big debts. we want to be individual. we are very focused on quality, which is what nobu restaurants have been around for the last 20 years. and we are growing very selectively as well. at the end of the day, our business model is something stronger than we believe tis th competition. >> why? >> our return to food and beverage underwrite the investment. so it's very good for the investors to take the nobu products and to put in a nobu restaurant and brace social spaces in the hotel.
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and it provides a higher term per square foot. >> thank you to chef nobu and his ceo trevor fallwell. worth a look, i think. >> i just get hungry watching that man speak. he is such an amazing man and an amazing place to eat. speaking of food, red lobster doesn't want to be known for just the seafood lover. beginning october 15th they will revamp their menu to include more chicken, more salads to the menu. that brings us to the twitter question, fill in the blank, red lobster with less seafood is like blank with less blank. tweet us our new handle, by the way, @squawkstreet. spell out street. we'll get your responses later. it's a little counter intuitive, don't you think. >> it is, but seafood is very expensive and chicken and salads are -- how much does a head of lettuce cost? >> they are called red lobster.
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americans are expected to spend more this year during the busiest shopping season of the
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year. in fact, the national retail federation says it believes there will be a 4.1% rise in spending this year. courtney reagan has the details. >> good morning, simon. the forecast of 4.1 increase in holiday spending is the highest initial holiday forecast out of the national retail federation in five years. it is also higher than the ten-year holiday sales average. it is still quite short after last year's 5.6% increase. last year is not economically robust, but this year consumers are burdened with new uncertainties. >> more than 85% have specifically identified the economy as the primary thing that they think about before they make a spending decision. and now that we have started to ask the question in a different way, more than six in ten are specifically identifying both the political climate and the fiscal cliff, in particular, as impediments to the spending decisions they would otherwise be making. >> once the election is over and
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there's some clarity surrounding the fiscal cliff, shay says the research indicates consumers could postpone purchasing. when it comes to holiday hiring, the retailers will hire between 585,000 and 625,000 seasonal workers. that does bracket last year's 607,000 seasonal jobs. and for the first time, shop.org is putting out a holiday forecast for online retail projecting growth of 12%. analysts say the stronger the multi-channel offering the better that retailer will do when it comes to winning the holiday dollars. retailers are certainly hanging their hope on the christmas spirit. the last thing many folks are willing to cut out of budgets is buying holiday gifts for loved ones. >> thank you for that, court. meanwhile, the faa is examining two separate incidents with passenger seats coming loose mid-flight on two different american airline planes in just three days. the airline has temporarily
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grounded eight planes. what's the fallout for amr and how will it affect the competitiveness that you can invest in? we are asking our own phil lebeau. this is the last thing amr's management needs as it negotiates the bankruptcy. is there any suggestion this could be in part as a result of the bankruptcy foul play, perhaps from some elements of the labor unions? >> there's certainly that talk around town that perhaps this is a case where the unions are being a little extra critical in terms of whether or not the planes need maintenance. while the faa investigates exactly what happened with the seats, it is too early to say who played a role in this. at the same time, the real issue is whether or not this has an impact on americans business for the foreseeable future. that question comes down to capacity that's out there. if you are a business traveler out there, will you stay with american or because of delays of
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this incident, because of the problems between labor and management do you finally say, enough. i'm going with united or delta, somebody else. in some markets, simon, like dallas, you don't have a whole lot of choices. so do you not fly as much? that's the real question over the next three to six months. >> jeff, what do you say to investors? >> i don't think even think it's a question. i mean, it is one thing for the flights to be late, it's another thing for the seats to come loose. i'm advising anyone i talk to not to fly american right now. they are clearfully a situation where labor and management are butting heads and strange things are happening. if i'm a business traveler and i want to get home for my kid's soccer game at night or need to make it to the meeting in the morning, it is just not reliable. but the bigger issue is seats coming loose. >> i'm told the seats were jiggling a little bit, it's not like they were flying around the cabin. >> and seats coming loose is a big thing because now i start to think, what do i do with my
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family when we take a trip. and where i think this will show up is not the september data but the october/november data. the tickets being booked right now, you'll see that move. >> jeff, are you seeing initial data showing that bookings are moving away from american? last i checked last week we had not yet seen that. we had seen previous bookings where we expected them to be. are you saying we are finally seeing the inflection point, if you will, where corporate travelers are -- >> phil, we lost jeff's satellite shot. so it is just you. >> i'm asking a question to myself. are we at the inflection point? if we are, that's a game-changer. that means american's management will sit there and say, we need to do something to come to some sort of a resolution with the they boor unions quicker. if we don't see that yet, guys, if we don't see the bookings moving away from american, this is one of those cases where you and i might say it doesn't make sense to fly these guys but
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people do. so maybe i question that to jeff. >> jeff is back. >> we are not seeing that in the data right now but i'm starting to hear anecdotely people booking away. i'm getting a lot of incoming e-mails from frustrated business flyers and this is what you'll see in the next month or two. i hate to say this is related to the labor negotiations, but when going through a bankruptcy and you aggragate labor deals, these are the things that happen. at some point the public says enough. >> jeff, give us the bottom line, what's the first metric that will come out in the next week or month or so to give us any indications as to whether american is actually losing a business? >> well, i think you'll see it in the yield. and the reason is i can always cut ticket prices and get that last-minute incentive traveler purely on price. but it's the business travel that really drives me and that's what you have to focus on. these are people that cannot afford to be delayed and don't want to be canceled on flights
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coming home. >> jeff, we have to leave it there. thank you for joining us. phil, we have seen you twice in the show, i'm looking for a hat trick later. thank you. >> yep. let's get another market flush this time from the real estate space. >> we are watching shares of zillow on a disclosure from the fec asking for more information. they ask why certain prescriptions in certain areas for certain data were more expensive. the sec is saying certainly that would be informative to investors investing in the company and whether that was based on whether there was more data provided for certain regions and areas as well. we should note that letter was sent on august 30th. and in the last month shares are down just short of 10%. we'll send it back to you. thank you very much, kayla. >> thank you. i'm here now to bring people up-to-date on our breaking news story we have been following.
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news first broken to give credit where it is due by bloomberg, but we can give you more additional detail on talks taking place between t-mobile, the wireless company owned by deutsche telecom and pcs, smaller player in the wireless arena in the u.s. a deal very close to being done there. in fact, maybe announced as soon as tomorrow. pcs shares have soared on the initial report. i can tell you from my sources this is a stock-for-stock deal. t-mobile is a private company but it would be merged with pcs creating a new code of which pcs shareholders get a certain ratio of ownership of shares, therefore ascribing or reflecting that percentage ownership. similar in ways to that spinoff if you recall where tyco spun off sealed air not that long ago when they announced that deal. now, we don't know the ratio or i don't know the ratio at this point, but i do know deutsche
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telecom would own a majority of the combined company. if you think back when t-mobile was valued at $39 billion by at&t, when it tried to acquire that company back early in 2011. perhaps not worth as much as that, but still worth a good deal more than pcs, which has a 4.5 billion market value. a number of interesting pieces go into this as well. you may recall back in, i think it was february, i reported that sprint was days away from acquiring pcs when its own board went against his ceo dan hessey and said we don't want to do this deal. is sprint still interested in pcs? i don't know. would it consider coming over the top to try to make another deal for pcs? unclear at this point as well. and, of course, you also have the larger issue of t-mobile in its place in terms of market share in the u.s., the fourth player. would it ever consider, that is deutsche telecom merging it with sprint and trust concern there
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is. sprint is a very leveraged company that had considered doing that deal prior to deutsche telecom's decision to sell to at&t. a deal which was stopped by the anti-trust division of the justice department. of course, they did walk away with $6 billion. as for pcs, the shares are up. don't know what percentage they would own but it would make a larger player in the wireless war, so to speak, here in the u.s. t-mobile certainly a far away fourth after at&t, verizon and sprint. stock reflecting that move. david, thanks a lot. when we come back, are you getting the full advantage of record rates in the low mortgage of yours? could more acquisitions be in store for the lenders? one of the largest lenders on the hot seat. and would steve jobs approve of the way ceo steve cook apologized for the so-called mapple gate?
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as we hit new record mortgage rates, i just sat down with the ceo of citi mortgage. diana? >> record low mortgage rates and record profits at the nation's big mortgage banks but can consumers say lending is too tight and they are not getting their piece of qe3? first to the news, a civil lawsuit filed by new york's attorney general against jpmorgan chase charging fraud and mortgage-backed securities. in an exclusive interview this morning, i sad sanjay das what this means for citi. >> the whole ongoing litigation
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is speculative. i can't really tell whether there will be lawsuits or not. i will say that we've put a lot of issues behind us from the settlements that have been done so far. we have done a large settlement as part of the large bank settlement with the international monetary settlement. and we are on the path towards fixing a lot of the issues from there. so we are much more focused on fixing the issues in our substantially long way down the path of fixing it. but unfortunately i can't speculate on what may come down the tube. >> he does not believe it will hit citi's bottom line. the banks claim they have to keep mortgage underwriting now tight, but the fact is they just got a huge drop in their funding costs thanks to qe3. while rates are low, the banks are not passing all the potential savings onto customers
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but selling mortgages at a peopremium premium. das makes no apologies for that. >> nothing wrong with people making profits, all right? i think that both sides of the system need to be healthy. i don't want to defend lenders but i will say that the amount of infrastructure it takes to do these billions and billions of dollars of loans is not insignificant. we've had to build new sites, we have had to hire thousands of people, train them, make sure they are doing the right sets of activities. remember, we are also dealing with huge amounts of regulatory pressure at the same time trying to make sure that every i is dotted, every t is crossed. this will cost something to be able to provide cheap loans to a vast number of customers very quickly. and i think that's where we are going. that's what we are going through, 3.5% for 30 years, there's nothing wrong with that. >> now as for potential lawsuits
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going forward, there is a press conference coming up in just a few minutes at 11:00. the department of justice shean joining a.j. snyderman from new york to discuss the civil suit. they may send a warning shot out to other lenders this could be coming their way. back to you guys. >> thanks for that, diana olick. >> doesn't that make you angry they're not passing on the lower rates to ordinary people. never mind whether you get a regulatory investigation to something that happened five or six years ago. they should be investigating now whether there's a cartel operating here. nobody else is passing it on. >> as you said, there's no requirement they pass on on the lower rates. we saw rates go lower, but they're putting the money into infrastructure and dealing with a legacy of problems, delinquent loans. what he says about that is they had to ramp up and to hire more and do more to get through delinquent loans and more refis
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and servicing. they're getting great rates themselves. why not pass them on to the borrowers? >> thank you, diana. >> let's get a market flash. ihorn making moves base odd what he said and not said, kayla. >> he's kicking off his speech saying ion horn is a verb. you can be einhond. he made harsh comments about the audit committee at green mountain saying it moved too quickly and came up short on the job and making comments on ae intellectual property and they lost property on k-cups and their relationship with st starbucks appears to be waning. green mountain coffee is coming off the low. we should also mention that herb ba life is up better than 3%. that's a short squeeze because
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aa lot of investors were expecting him to make a negative commentary on herballife. that's positive. >> you're looking at some of inner brands top global brands from about ten years ago. coca-cola ten years ago clocking in at number one on the list. so next on the program we'll be asking whether coke is still able to keep that top spot ten years on. you'll notice that apple is not listed there among the top five ten years ago. the ceo of inner brand will join us live next.
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is nounce announcing the top 100 brands. before we dwet into it, how do you judge the brand science. >> you look at the proportion of the earnings to the brand. put a number on how important is this brand to the economic power of the company. >> i'm saying now revealing it, why is coke number one and not apple? >> coca-cola, i mean, one thing about brands is that they are not just a measure of what's going on now. they are a view into the future as well.
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the thing about coca-cola that you can't deny, 100-year-plus history of consistently delivering great product and relevant brand to people. apple -- as far as apple is concerned, we know they're doing great right now, but there's concerns about what might happen in the near future with the loss of steve jobs. >> i understand why you're so focused on brands, because brands is what you do. you advertise companies. they pay you money to make their brand bigger. actually in a world in which we're connecting over the internet where i care if my coffee maker is purchasable on amazon rather than the brand of that coffee maker is what you do for a living becomes less relevant? >> i'd say it's more relevant. there's such a proliferation of products nowadays and it's easy to get anything anywhere online. brands help us choose and simplify a complicated life around us and make our lives easier. for many different companies the difference between one product
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and another is marginal where you can really add value with the service you put around it, what your brand stands for and what it says about you as the owner. >> do you find that apple is moving higher, do you find that the stock market capitalization of these companies is an indication of where the brand value is actually going? do you find yourself lagging what the market is doing in the way you rank these things? >> what you find is a lot of volatility in stock markets. stuff goes up and down. brands are a risk reduction mechanism. they give you a view into the future over the longer term. >> nice to meet you. a fellow bri itt in new york. >> thank you very much simon hobbs. einhorn says he's long that stock. look at that pop of 1.6%. much more "squawk on the street" straight ahead. turn an entrepr. ♪
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those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule. why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world. professor sargent, can you tell me what cd rates will be in two years? no. if he can't, no one can. that's why ally has a raise your rate cd. ally bank. your money needs an ally. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from?
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your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. good morning. let's get a check on the markets on tuesday morning. the dow has lost about 43 points and split markets as the s&p is barely hanging on. it's negative now. the nasdaq is up 7 to 3120. juniper networks rising sharply
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today after the company says it will layoff 500 employees to meet next year's cost-cutting goals. it reduces the work force by 5%. mosaic reported disappointing first quarter results says the company's profit shrunk shank 18%. >> this is something you don't hear every day. a foreign company bringing new jobs to this country. we'll tell you how many jobs, where they are, and what company is responsible. plus david einhorn, it is hedge fund titan shares his best ideas with investors from all over the world. we'll tell you what those ideas are. jk penny's ceo is talking about reinventing retail in new york. we'll find out what he says about the transformation at the retile giant. if steve jobs were aalive would he fire tim cook? one expert thinks he would. we're going to debate if he's
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right. all that is coming up in the next hour. you're looking at a live shot of where new york attorney general eric snyderman is speaking to the press at the department of justice in washington about the suit against jpmorgan. what are we expecting from this conference. >> this is a potential new model how the feds and states bring accountability a. eric schneiderman brought the suit under the new martin act but got help from the justice department, all part of a mortgage-backed securities working group first announced by the president in january. >> this new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many americans. >> the lawsuit filed yesterday reads like the story many have
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come it to believe about the financial crisis. bear stearns is addicted to originating mortgage, bundling them up sxeling them as securities not telling investors many mortgages are duds. when the housing boom busts they're out $23 billion. this is the first case brought by the working group but not likely the last are others on wall street quaking in their boots? diana olick asked the ceo of citi mortgage about the suit a short time ago. >> we don't know whether this will hit citi bang k at all. we think not because of what we've done to mitigate the issues substantially. >> jpmorgan wound up owns bear stearns at the behest of the feds in 2008 says it plans to contest the case and is disappointed in the attorney general. judge is eric going after conduct in a firm essentially dead? we will ask him first on cnbc on power lunch at 1:00 p.m. eastern time. carl, back to you.
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>> that is a key question, scott. reading that complaint, if people haven't already, bringing bam colorful language from days we'd rather forget. we look forward to a lot more today. scott, thanks so much. our capital markets, and we have gary cominski to post-9 once again. >> good thing we have an op ed logo today. you pick up the papers today, "wall street journal," "new york times," you have the headlines about this. the headlines should read the following. after four years of investigations, taxpayer money spent on investigations on top of investigations, this was the best they could get? i mean, carl, my mother, okay, despite the fact that there's 100 years of combined money management experience of the family through my father, brother, myself. my mother who knows nothing about wall street can tell you that there was fraud in the mortgage-backed securities and securitizations business. i think it's sad. i think these papers should have
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the headlines today that this is the best they could do? it's pathetic. on the topics of newspapers, i want to point out if you read "the journal" and "times" today you heard about this. the financial times has an interesting column on mortgage securitization. what they say is we're finally getting to some sort of resolution here with the suits today, guess what? wall street is once again slicing and dicing loans and packaging them into securities. they can't do this in residential mortgages right now because the market doesn't allow for it, but they are in auto loans and they're doing it in addition to some low-rated subprime corporate loans. so once again, we're finally getting resolution. what does wall street do? repatch loans. we'll be back here again. >> people are appointing to disappointments in auto sales today as one more feed stock to potentially boost the amount of subprime auto loans in the country. >> you know that the manufacturing business of wall street had a way to find other
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securitizations. the same people who can't believe there's been no criminal indictments can't believe that the public is surprised that wall street is once again manufacturing various types of loans. that's what the business is, so we're right back where we were. >> do you think snyderman should have let this guy like a statute of limitations had run out? >> i think something had to happen, but i think it's a sad commentary on where we are, if this was the best case they could bring, and this took that long to bring it. do you read "the new york post," page 6? >> yes. >> i didn't catch this. you pointed it out to me, and rick santelli i hope you are listening. there was a piece today. jon corzine, page 6 points that jon corzine had dinner on saturday night at elmilino where you can get a bowl of pasta for $89. he was there having dinner with
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with alan grubman, entertainment lawyer and taxi magnate. rick, if you want to know where jon corzine is, and i know a lot in chicago want to know, having dinner at the new restaurant upper east side manhattan on saturday night. >> gary, of course, i believe in freedom, and obviously, he hasn't been charged with anything. he can go spend $1,000 apiece for a strand of spaghetti. i don't care, and i wish most americans could afford a thousand dollar strand of spaghetti. i bet when he closes his eyes at night to go to sleep, i don't think he has happy thoughts. you know, whether the legality catches up with him, whether the politics release him to the legalities, because i think it's all about politics, but in the end, you know what? you and i sleep well at night. i doubt if he does. there's so retribution on that level. >> well said, rick. by the way, let's get a tuesday edition of santelli exchange. what do you say? >> we're going to talk about
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contrary indicators. i think contrary indicators is a fascinating issue. consider this. why do we look at the vix? because when everyone r everybody wants to buy insurance at the equity markets for example could move lower and the put skews. usually it's a herd mentality. it's like gaining the herd menl talt. it's like the pendulum swinging. when you get up to one spot, the market is betting that there's some mean reversion. if the ship is lists because all the ralph cramdens are on the starboard side, it's a good bet to go the other way. gaining the herd mentality gets tricky, because like in our pendulum, it's all about timing, timing, timing. just like real estate is location, location, location. where am i going with this? i'll tell you. there's a lot of stories of late how bond funds and money markets in terms of all the financial assets under management by the
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institutional managers, mutual funds is at the bond funds and money markets are now taking a significant ma jorjority of ass at the expense of equities. it's not a new story. the new story is there's a sense of urgency to this. like a contrary indicator, maybe it's time to look for an added turbo thruster to the upside of stocks. i'm not saying any of that is not true, but what i'm saying is when it comes to bond funds and money markets and how dumb and unrealistic and all the bright people telling us who in their right mind would put their money there, obviously there's a lot of people doing it because it's trillions of dollars. but in the end as a contrary indicator, it may be right. i think if you're starting to grow a beard today, it will be down to your knees before that indicator actually gives you the signal to make money on. carl, back to you. >> we'll see you in a few moments with orrin hatch.
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while they compete with foreign companies taking american jobs there's a chinese company bringing jobs to the u.s. we'll find out who it is after the break. these markets can be just aas unpredictable as the weather. this month don't get caught in the rain without being prepared, and one way to do that? carry an umbrella. now is your chance to win a stylish cnbc one signed by the "squawk on the street" gang. if you can guess friday's non-farm jobs number, it's all yours. treat your guests to our new twitter handle, @squawkstreet. for all the official rules and details go to the website. you have until 8:29 this friday morning. good luck. of any small business credit card!
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welcome back to cnbc. this is a market flash on cigna. the stock is spiking better than 1% getting a mention by david einhorn at an investor event in new york city. einhorn is bullish on ci and it's a better investment than other hmo health insurance providers. that stock is up about as much as the market this year. we're watching cigna. but a couple rare longs from the
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famous short investor einhorn today. >> kayla is watching a bunch of headlines. chinese computer maker lenovo will start making pcs in north carolina next year. what does this say about our economy and about what's going on in china? joins us is david, lenov ooleno president of north america. how did this get decided, and when does it all come down? >> what we will announce today is we're expanding or facility in north carolina to bring u.s. manufacturing starting in january through our think product portfolio. our think pad notebooks and think server workstations and servers. we're very excited about this. it's really bringing a differentiator for us versus the market. we believe there's a customer demand for u.s. manufacturing not only for the manufacturing
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presence but also what we could bring to differentiate ourselves around the customer experience that a local manufacturing plant provides us the flexibility to do. >> were these jobs that were elsewhere that are essentially being imported into the country, or are these new jobs? >> these will be new jobs we're creating. as you may not know, we're the faste fastest-growing pc player in north america for the last nine quarters and have expanded our presence in the u.s. and in north america. this created our flexibility to enable this production facility to come online and fuel the future growth through what is different from the competition. >> a lot of discussion about what labor costs in particular have done in countries like china over the past year. it's simply not as economical to build things in that country as it was a few years ago. did that play into this decision, and do you think we're at a tipping point where on a cost basis it makes sense if you're going to start something
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new to do it in this country instead of somewhere else? >> what i look is more not a pure cost play. i look at the value in the customer differentiation it brings. i believe there's a certain part of the market i'm excited about that really will embrace not only what u.s. manufacturing does by itself, but also what you can provide the customer through a differentiated customer experience as to services, logistical support and et cetera. i think now that the cost -- right now the labor element of manufacturing is relatively minimal. that the cost delta is close enough to where those extra services and those differentiators make it a strategic advantage for lenovo in the u.s. market. >> we all know what's said about the pc market right now, david. hp's going to have a big presentation tomorrow. they're trying to make the case the pc is not dead. every day on this set we field calls from analysts downgrading the intels and microsofts. what is the best single argument
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you can make that the pc is not suffering on a large scale from tablets and smartphones? >> what i believe is that the pcs are still core. i think we are clearly moving to a multiple device world, but i believe pcs not only today but long term have a key part of that eco-system, what people need not only from consumers but also professionals in the workplace. i think the pc is still core, but as lenovo we're expanding into the other device markets. we're in tablets, and i'm excited about what thinkpad tablet 2 will bring to the marketplace with the windows 8 launch. i still believe pcs are at the core of what we do, despite a lot of the buzz and the excitement that the other categories bra into the overall market. at the end of the day, there are more devices that happen, and pcs are still a core part of the
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eco-system. >> even in this transition period we're removing smartphones and tablets that growth in the pcs in the years to come are difficult to come by. >> we have a challenging market over the last 18 to 24 months in pcs. i'm more bullish in the next 12 to 18 months that we start seeing an uptick because of what a lot of new form factors. if you look at the convertibles that come out with the windows 8 launch in october, we had a product that we announced at ces that won best-in-class, our yoga product. it's a convertible into a tablet and notebook. we believe that convertible market allows some differentiations in pc as touch because more prevalent in clamshell type notebooks. >> good news about the jobs, and we appreciate you sharing it with us on "squawk on the street." see you next time. >> nau for having me. when we come back, bill
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the street." david einhorn rolling out a short thesis on chipolte causing the restaurant group to loss a million dollars in caps. he said it's a nosebleed valuation. the company has a lot of near-term issues, among them the recent drought and labor issues and health care law, but there's a resurgery he not taco bell. i don't know if i he believe that, because i don't love taco bell. that's david einhorn's opinion. >> we'll see how long that lasts
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as well. thank you so much, kayla. let's get to rick tan telly in chicago. has his own response to bill gross's unbelievable note out of pimco, rick. >> it's so darn true. he talks about we're serial offenders, like crazy for cocoa puffs except for we're crazy for debt. we're crazy for printing. his analogy is, you know, we're addicted to budgetary crystal meth. then you read some of these op eds, and there's a lot of economists that say, yes. the problem is is we need to make crystal meth cheaper. that's their answer. i kid you not. what do you think about all of this? artie, he's one of the guys that represe represents things that the fed can can print, by the way. >> the treasury market, i mean, you have to respect the size of this program. the size of this program is enormous compared to anything else we've seen before. >> between the twists and between close to 2 billion a day
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on the mbs side, which is more ys.n issuance several of th >> several of those days. at what point is enough enough? >> do you agree with larry lindsay? they say the fed's balance sheet is paying for the debt. >> they're money tiaun tiesing debt. there's lots of stories in history. chamberlain worked really hard in europe, and didn't bring anything out of that. >> is that the quote of the day, neville chamberlain worked really hard, too. i can remember him off the plane shaking treaty. we go to the guy that represents things the feds can print. we have our gentleman farmer, matt charps, southwest michigan. let's talk about the corn and beans. the beans, you're harvested a couple of fields already. >> variability is the world. one went 41 bushels an acre, and
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lass year it was 78. the other field i thought was good it ended up 24. that normally is 55s. >> getting above and beyond actual production, what's the quality look like? >> quality is okay. they're a little small, smaller than normal. you take a little bit off a bean, it takes up a lot of volume. >> that's all right. the dollar is smaller than normal. you're harvested a couple fields a little early. harvest is normally kicking around halloween. we talked about the corn. give us an assessment there. >> corn, you can estimate that fairly well. again one field, 70 bushels an acre and the next one is 140ish. i'll know in a couple of weeks. >> we didn't get above $18 in beans. with corn we never got the $9 handle, did we? >> no. >> many of the median analysts had it wrong. it wasn't that everything is great with agriculture, but there was destruction like feed, animals, correct? >> it's hard to rally out of the
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fields. >> let's go back to the can print side. when you look at all this going on, art nolan, what do you think is the final outcome? do you agree with bill grossman? if you want a balanced budget or want to pay your bills, nowadays that's an extreme opinion. >> what's interesting is bean, corn, all this stuff. there's so much money injected into the system. they keep saying there's no inflation unless you drive a car or eat. obviously, anybody living right now knows that there is inflation. you have to feed your family and eat. this money coming in, some goes into commodities. there's few places to go. ten years are approaching 150.h before they look for other alternatives to go to? >> when it comes to inflation, it's a bunch of fibs and white lies. when a baby is born and you look at it, do you think it stays that size forever? you can pretty much bet that at some point ilts going to get
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bigger and taller and heavier, right? isn't it the same with inflation? it's planted and it's little now. we know it isn't hitting, but it will? >> the argument that many people make out there is if you calculate it from the old ways or you actually use a gas and everything else that people need -- >> that's food and energy. >> we don't care about that. he couldn't get it right regarding ann schwartz. yesterday he said that if they were alive they would have liked his strategy. they obviously didn't read that piece in the 2008 edition of the wall stre"wall street journal." >> deflation vacation or inflation gestation as a wise man once said, rick. we'll talk to you. rick santelli. a few more minutes left in europe's trading day. we'll see what the close is like over there and how it might impact us here this afternoon in just a moment. that feels. that feels. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms
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chase allows us to buy capital equipment to be able to manufacture in the states to the scale we need to be a global company. with a little luck green toys could be the next great american brand. find what's next for your business at chase.com/mainstreet the european markets are closing now. >> it's a mix of red and green as simon hobbs is here to tell us. >> we were doing better at europe until wall street opened in negative territory. that erased some of the gains. there are two important questions. now how far up spain is on the bottom left. still in positive territory, significant positive territory. there are two big questions in europe at the moment. one, when will spain ask for a bailout? two, what will the market reaction to that request be?
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we had an answer to the second of those questions today, and it will be positive. reuters overnight had been running with a story that spain this weekend could ask for a bailout. perhaps the germans were putting the brakes on that process. they're meeting with the regional heads to do a deal and he held a news conference. it's become apparent he's saying i will not ask for a bailout this weekend, and maybe the reuters story is more about europe being ready to accept a bailout and all the conditions in place and there won't be more onerous requests on madrid when they trigger the buying. we haven't got the bailout we thought we would. it's still on the back burner. the price action in response to that is positive as far as spain is concerned. this is a chance for the spanish stock markets since mario draghi said he would do all he needed to save the euro. despite the fact we dipped down, we moved higher again today, even though they're selling in
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europe it's a gain on madrid stocks of 1.3%. if they ask for the bailout, could you get another leg higher on the equities rally? it's a question. on that reuters report that you have the spreads move in. in other words, the bond market has rallied in anticipation of perhaps potentially ecb bond buying and the yields came down. on the ten-year you see the yield moving 13 ticks lower there. if there was buying, it would be at the short end. maturity is up three years. you see on the two-year a much more dramatic move on the spanish yields and you see it in italy as well. the spreads come inning there and this rally on the peripheral bond market. they move it short end again lower. we have to keep an eye on what's happening in greece. day two of the haggling today at the european commission, the ecb, the imf members have to
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fight past -- not fight past but navigate protests outside the ministry as they continue to debate -- whether greece is doing enough structurally or not. they have to get a deal ideally on the budget next week when the finance ministers from the rest of europe meet. they're attempting to go through. who wants that job past the protesters to argue with greeks whether they have another 2 billion on the austerity. those talks continue. it's important to point out and sometimes it's difficult and it's the real world getting information out of greece as to what's happening. i'll show you the price action on greek stocks, and they are higher. some of the big blue chips moved higher and some banks moved higher today. i can't tell you why, but i can put the two events, the meeting and the stock market price action side by side and say that's the market close. back to you. >> good stuff, simon. thanks a lot. gary, are you watching the story "the journal" today regarding --
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>> well, i guess we could summarize this as why spend $2 on the "wall street journal" today was not a good investment if you read it. here's a story talking about how merrill lynch is going after these morgan stanley brokers. we talks about the issue facing morgan stanley, not just the facebook ipo but with the brokers. bank of america shareholders, what this article doesn't tell you is very simple. if you pay a broker call that produces a mill dollars in revenue, this is how they take place. you move from firm a toll firm b. here's the problem. >> it's not a bonus per se? >> it's a forgivable loan, it's up-front money and paid over a period of time. what i don't read here, true cost accounting says you don't make money. back of america won't make money off of these brokers' productions until year seven or
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year eight. true cost accounting is they don't produce earning to the bottom line for seven or eight years until they move over. is this what you want, brian moynahan? that what you want your management team doing right now? paying top dollar to bring brokers in? many brokers -- morgan stanley doesn't mind their leaving because they're not producing the outsized revenues. don't be surprised if some leave. do you want them coming to your shop? >> why would it take so long for them to start adding to the bottom line? >> again, you're going to give a typical 40% payout. true cost accounting in terms of all the expenses associated with the broker in terms of assistance, overhead, allocated p&ls, things of this nature. let's say there's a 10% or 12% profit margin. you won't make that money back for seven or eight years. each firm will give their own baking how they do this, but at the end of the day it's a bad investment. you read this article, carl, it sounds like a good thing for
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bank of america. i beg to differ her. >> talking about a red day after a rally na got chopped in half yesterday. >> bank of america up 6% this year. incredible recovery as a bank themselves as an investment for the quarter. simon gave a great summary on what's going on. the markets fluctuate as to whether or not there's a deal for aid to spain. everybody is asking when the aid is going to come and what germany says about it. they get closer. you can see the market fluctuate as the october 8th event doesn't look like it will happen. a big eu summit meeting at 18th and 19th. that's where you get the aid request. the fly in the ointment is will germany throw in additional requirements for that aid? we don't know. we don't know what they'll say at this point, and you expect the market to fluctuate on that. if you look carefully, it's tough to make any brand assertions about what the stock
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market is doing today. this is not a terribly interesting distribution here. it's on either side of positive or negative. on days like today, i look at exchange-traded funds and the volume. i follow a couple hundred. you'd be shocked how much volume these have these days. look what's getting heavy volume today. stock funds, stuff that owns large slots of the stock market. you want to own the u.s. stock market? there's nothing better than vti. this is the big exchange traded fund. total u.s. stock market that vanguard runs. kbe, this is a bank fund. you can own a lot of bank stocks here. that has heavy volumes. the etf that owns german stocks and the russian stocks, the etf that owns indian stocks, wisdom tree, have comparatively heavy volume today. people are still out buying stocks and stock funds, even if the percentage changes in the prices are not very high. i think that's important,
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because a lot of people are still underperforming a lot of markets, particularly in the united states. this is an indication people are trying to buy stocks even if there's not a lot of price moves. i got a lot of questions yesterday about what's going on. we had an unusual day yesterday. the dow was up 120 points and the vix went positive. a lot of people saying does that mean that some of the options riders are getting nervous on things. look at the curve. this is the vix curve with the futures going out here several months. you can see october, you get further out the fixed curve goes up. this has gone on for months now. if you look at october right now, four months ago this was over 20. this curve has been roughly the same for months on end now. the important thing is as we get closer to the actual events, what you see is the vix curve drops and drops and drops. while people worry about things four or five months out, when you get closer to the events, prices come down. this is the pattern for months now. my bottom line is i wouldn't
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worry about the vix right now. >> thanks a lot, bob. nice to have you two on. check out some of einhorn's calls from today's value investing congress. the famous short is likes green mountain coffee, gm, cigna, and his short idea is chipolte which is getting hammered down 5.5%. if steve jobs were alive, how would he feel about tim cook? one expert says cook would be as good as fired. we're going to talk to that man next. later find out what jcpenney's ceo is saying about the retailer. the dow is down 75 points, a lot of that is surrounding expectations for a bailout for spain. we're back with that after the break.
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into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. the trading summit begins at the top of the hour with some of the industry's biggest names. mark cuban tells us why high speed traders are the ultimate hackers. hedge fund heavyweight leon cooperman on how the s.e.c. can put to aend to the casino on walt street. a high speed trader defends his business. it's minutes away. we'll see you in about 15 or so. >> nice to see you back in the saddle at hq. steve jobs was known as a perfectionist and mathser of innovation.
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anyone stepping up to the plate has large shoes to fill. some question tim cook's ability to lead america's biggest company. he's a contributor for the street.com. he says if jobs were alive today, he would have fired tim cook by now. he's the former ceo at medtronic. good to have you. >> good morning. >> good morning. >> let's start with you, since you throw the fire bomb today. you you say cook butchered this one, in your words, and you call it an incredibly sad story. walk me from that point to actually losing his job for this. why would this have happened? >> first, i'm an apple fan. i bought this iphone5 when it came out, one for me and my wife. i bought a retina display macbook pro in august. i love apple, and that's why it's a tragedy. i look at tim cook who is clearly an accomplished executive. he's a typical mba executive.
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i think to myself, based on the way he's handled this and based on the way he's handled certain things since he took over for steve jobs, he's the kind of guy jobs would not want around. i think he fits the definition of a b player, and jobs talked about the bozo explosion whether the b players take over your organization, you have a bozo explosion. you know that you have a problem. that's what happened here. its a tragedy for two reasons. number one, for the obvious reason. apple will fall from its mystique and maybe become a good company instead of a great one. it's also a tragedy because i think it's an unworkable situation. jobs left us too soon, and you know, it's obviously the biggest tragedy there is for his family and friends and so forth. it has an impact on apple, and as a result it has an impact on a lot of people around the world. >> bill, i'm thinking of the market cap that has grown over cook he's stewardship. when jobs were passing the baton, people say his greatest
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creation of all time was tim cook as his successor. do you think this would have happened under jobs, and how do you think jobs would have responded now? >> i think it could happened under jobs. if he had to fire anybody, he might have had it to fire him. this started when jobs declared thermonuclear war on google. they could have put the google map app on the iphone5 like on the iphone4. this is how to handle the crisis much like jim burk handled tylenol for j & j. there are three things to do. so far tim's done two of the three and declared he's going to do the third. the first is, you got to accept responsibility and admit a mistake and apologize. did he that. i doubt steve would have done that. >> you mean apologize unequivocal? >> yes, aapologize unequivocal rather than defensively and all
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that and make excuses. second of all, you have to have a short-term fix. many times you don't have something to put in the breach because it's not really fixed. they suggest you go and get google maps, and i did that this morning on my new iphone5. you can get mapquest, so that's a short-term fix. third, he has to get the problem fixed and make apple maps certainly as good as google and probably better. he's got to be committed night and day to do that. i think it tim learned a lesson from this. that says you have to be involved in every single detail. you can't delegate the details, and he shoovb playing around with the maps himself. >> rocco, you must have a good reason why you think it's not fixable in the long term. >> it's not a question about whether it's questionable or not. i respect bill's opinion. it's sensible. i couldn't say he's crazy for saying cook handled this well,
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because it was a textbook handling of the situation. if somebody has followed apple for a while and admires steve jobs, that's my problem. apple never handled things out of a textbook, and that should scare you if you love this company and want to see it continue to do well and if you're an investor with a long-term bench. everything is fine in terms of the pipeline and revenue and sales and you don't question that. i see things sort of crumbling. would jobs have fired cook or been unhappy with this? i think he would have been unhappy with the way he handled it, no matter how many textbooks say it's the right wake to handle the crisis. when jobs apologized for lower the price on a iphone, he spent three quarters of apology letter saying he made the right decision and here's why. at the end he says some of you are disappointed, so we'll throw you this bone. that's classic steve jobs. that's classic apple. they've lost that. now, the question and i think
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bill will have a good answer for this, does that sort of mystique and that sort of arrogant way, does that correlate to being able to be innovative and put out great products over and over again like steve jobs? >> think different? >> exactly. i think it does. i think bill will have great insight on this. is there a correlation between these two things? >> bill, i would let you answer that if i had more time. they've cut us short. i think it raises a good question about the renegade character of apple and whether or not that is here to stay, guys. i have to let you both go. we'll see you next time. >> okay. >> thank you. >> we'll get to kay kelly covering green light capital's david einhorn speaking to the values investment conference this morning. >> david went through about four different investment ideas with the audience and actually implied a couple of other investment ideas which i'll get to in a second. he led off with green mountain coffee, which is something he's been bearish on for quite some time now. he talked about his comments at
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this eeflt last year and expressed a bearish he perspective then. there was an audit committee investigation that ensued shortly after his comments, and within about three weeks the company came out and said they found no wrongdoing. he clearly found fault with that. he thinks there's a likelihood of improper accounting at this country or if not at a minimum a whole lot of wasteful spending. he went into detail about the expiration of the patent on the k-cup which green mountain enjoyed for a number of years. competitors are looking to come out with rival products at a cheaper price point, and he thinks that will hurt green mountain deeply. during the q and a, do you think it will go to zero? we don't have to figure it out right now, but we think it will lose ground. he surprised people by talking a little bit about gm. he said gm, the automaker, of course, remains an ugly duckling in the perspective the market, but he thinks it's much
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healthier than the market gives it credit for and that there are misimpressions about gm that once corrected will improve the stock's performance. he thinks concerns about pension risk and health care costs are way overblown. if you look at it, they're in much better shape than the market is giving them credit for. he also thinks that the reviews of some of their new vehicles including the cadillac ats have raves, that a lot counts on the 2013 and 2014 chevys, the suvs, but he thinks they're well-positioned. also concerns about their positioning in europe are overblown. he thinks europe could be break even within about three years. moving on, he talked about cigna. he said that hmos are generally a beaten down sector, but that cigna is in a much better position than competitors. less vulnerable to the issues of obama care than others. this might have surprised people. he said chipotle is under a
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major threat from talk woe bell. 4,000 consumers talked about how they liked taco bell and the recent menu rolled out. einhorn thinks this could pose a competitive problem for chipolte in the years to come. >> just to be clear, he did not say he was going long yum, did he? >> good question. someone did ask him that in the follow-up, and he said, look, i like what's going on at yum, but i'm a little nervous about two things and i'm sure there were others. kfc in china he thinks has issues and imt not convinced there's anything good going on at pizza hut. for those reasons he's on the sidelines. he thinks taco bell is in a great competitive spot. >> kate kelly join you go us from the value investing congress. when we come back, he's the man responsible for trying to reinvent jcpenney. we'll get an update from ron
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johnston and what's next for the retailer in just a moment. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. boring. boring. [ jack ] after lauren broke up with me, i went to the citi private pass page and decided to be...not boring. that's how i met marilyn... giada... really good. yes! [ jack ] ...and alicia. ♪ this girl is on fire [ male announcer ] use any citi card to get the benefits of private pass. more concerts, more events, more experiences. [ jack ] hey, who's boring now? [ male announcer ] get more access with the citi card. [ crowd cheering, mouse clicks ]
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the best and brighter are gathering today. court knee caught up with jcpenney ceo ron johnson to get an update on the retailer. she joins us on the phone. >> just moments ago i wrapped up with speaking with ron johnson about how the business is is going in the middle of this big transformation. you know he's getting ready to speak in front of a group of
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investors and other retailers here in new york city. basically ron johnson said that what we can expect for holiday is that jcpenney style holiday. they will participate in black friday, but sticking with their fair and square plan. other than that, he wouldn't reveal the details but said november 1st we'll know much more about the holiday. interestingly for the first time since the announcement of the transformation, ron johnson also says today at 4:00 he'll be speaking with employees about those 400 jcpenney stores across the country that will not have shops. he said they will be changing the presentation and the product and will know a little more today. i believe we're the first ones to know that detail at this point. additionally, he does expect to grow sales in q 1. when it's been a very, very tough year of transition, and if the street should look at comps almost starting from square one as opposed to the basis we use
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as the growth or decrease year on year. his number one christmas wish? traffic in the stores. carl. >> we'll see if he gets it, kor any. thank you so much. jcpenney is the the fourth biggest loser on the s&p down 3.5%. when we come back what mark zuckerberg had to say about dropping out of harvard, next. l which can withstand over three and a half tons. small in size. big on safety. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know.
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mark zukckerberg spoke earlier. he addressed copyrights and dropping out of college. >> it seems like a lot of students, they say stay in school. what's your message? >> you know, i dropped out. i don't know if that's worth clapping for. >> he continues to make his way around russia. we have 30 seconds for you. what's on your mind? >> i heard from the secret trader this morning. we listened to him because he's dead right and he sent this to me at 4:00 a.m. he thinks we get a 5% to 10% pullback, carl, it willot

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